INDIA WIND GIANT & BAHRAIN BANK BUY CHINA WIND

This little news item about a deal between Suzlon, an Indian turbine manufacturer, Arcapita, a Bahrain bank, and Honiton Energy, a Chinese wind developer, might at first seem an insignificant bit of business news but it is, in fact, an indicator.

An indicator of what? Of the “rise of the rest” (to use Fareed Zakaria’s phrase) in The Post-American World (Zakaria’s most recent book). It is a world in which the U.S. will have a “diminished but not irrelevant” part to play.

The irony in this instance is that the U.S., by refusing to see the handwriting on the wall and wean itself from fossil fuels in the 1970s, squandered its opportunity to be the world’s leader in New Energy. And, to add insult to injury, a recalcitrant Congress obstructed by a minority of fossil fools mired in 1950s thinking continues to resist the kinds of policy measures (like tax credits for the wind and solar industries) that would grow U.S. capacity to be the nation making deals to export New Energy.

From a synopsis of Zakaria’s book: “Archaic systems of government that lend themselves to hijack by vested interests are stalling the adaptability and flexibility of the American nation, that was once the backbone of its unprecedented growth.”

It is also the SCALE of the deal that impresses. In its 3 years of existence, Honiton Energy has built 50 megawatts of wind capacity and is presently building 100 megawatts more. With this infusion of Bahrainian money and Indian industrial know-how, it will build more than TEN TIMES that amount in the next 4 years.

The Joint Venture is becoming the way business is done in China today by non-Chinese. (click to enlarge)

India’s Tanti Group in JV with Bahrain Firm to acquire Honiton Energy Holdings
July 7, 2008 (Thomson Financial via Forbes)
and
Tanti Group to invest with Arcapita Bank
7 July 2008 (The Economic Times of India)
and
Arcapita announces US$ 2 billion partnership to develop 1,650 MW of wind generation capacity in China.
7 July 2008 (Zawya Middle East Business Information)

WHO
Suzlon Energy Ltd. (Tulsi Tanti, Chairman/ Managing Director and Director, Colossus Holdings) (through majority shareholder Tanti Group which includes Colossus Holdings); Arcapita Bank B.S.C. (Atif A. Abdulmalik, CEO); Honiton Energy Holdings Plc.

WHAT
Suzlon and Arcapita have formed a joint venture (JV) to purchase Honiton and develop wind farms in China.

Suzlon is among the biggest - and deals like this will grow it bigger. (click to enlarge)

WHEN
- Under the terms of the JV, Arcapita Bank will invest $2 billion in wind development in China by 2012.
- This is Arcapita Bank’s first investment in China.
- China had 6,000 megawatts of installed wind capacity at the end of 2007 so this deal represents a significant increase.
- Honiton was established in 2005.

WHERE
- Honiton has agreements to develop wind installations in 5 separate areas of China.
- Colossus Holdings, based in Sinagpore, is a holding company for the Tanti group of companies which owns Suzlon.
- Arcapita Bank is based in Bahrain, with offices also in Atlanta, London and Singapore.

WHY
- The JV will use Honiton’s agreements and holdings on which to develop another 1,650 megawatts of wind energy capacity in China over the next 4 years.
- Honiton has 50 megawatts of installed capacity in China 100 more megawatts under construction.
- Suzlon is the 5th biggest wind turbine manufacturer in the world (after Vestas, in Denmark, GE Energy in the U.S., Gamesa, in Spain, and Enercon, in Germany).
- China’s present 2,500 terawatts of power generation capacity is expected to grow exponentially over the foreseeable future and it is expected to consume as much wind energy capacity as can be developed.

Inner mongolia: Where the China wind blows. (click to enlarge)

QUOTES
- Tulsi Tanti, Director, Colossus Holdings: "This investment reinforces our commitment towards the renewable energy sector and belief in the exponential growth potential of wind energy in developing markets like China and India…"
- Atif A. Abdulmalik, CEO, Arcapita Bank: "We have previously built expertise in this sector, which we are very pleased to be extending through this partnership with the Tanti group. We believe this is another high quality investment opportunity in Asia, where we have now done 7 transactions, 6 of which have been completed within the last 12 months. The total transaction value of our Asian portfolio is more than US$5 billion."
- Asim Zafar, head, Arcapita Assets: "With increasing energy demand, rising fossil fuel prices and growing need for clean and renewable energy, wind energy has developed further than the existing alternatives in its potential for scale and efficiency. Honiton has an excellent asset base, as well as a management team with good relationships in China at a regional and state level…"